Australian dollar extends losing streak against kiwi, yen, euro

SYDNEY: The Australian dollar extended a long losing streak against the yen, kiwi and euro on Thursday, weighed down by shrinking yield buffers, while renewed US strikes on Iran knocked global stocks and lifted the greenback.

The Aussie slipped 0.1% to NZ$1.2070, down for a sixth straight session as markets price in a rising chance that the Reserve Bank of Australia might be done hiking after three rate rises this year.

In contrast, New Zealand’s central bank is widely expected to tighten policy in July.

It also hit a one-month low on the yen at 112.15 and scaled a two-month trough on the euro at 0.6062.

Against the US dollar, the Aussie inched 0.1% higher to $0.7006, bouncing off a two-month low of $0.6987 hit earlier in the session.

It managed to find support at 70 cents, having lost a whopping 1.8% since last Thursday.

Much is riding on developments in the Middle East where the prospects of peace and reopening of the Strait of Hormuz are dimming.

The United States launched fresh strikes on Iran overnight, while Iran announced the closure of the Strait of Hormuz in response.

“There is an acute risk of more tit-for-tat responses that will leave the ceasefire in tatters.

The USD is likely to stay bid on safe-haven demand, and risk assets such as equities could see a pullback,“ said Chang Wei Liang, a strategist at DBS Bank.

The kiwi, on the other hand, was flat on Thursday at $0.5796, having lost 0.4% overnight.

Support is around Monday’s low of $0.5790.

The Reserve Bank of New Zealand next meets in July, and markets imply an 85% probability it will hike by 25 basis points to 2.50%.

Investors see a further two moves to 3.0% by year-end.

The RBA is widely expected to hold policy rates at 4.35% next Tuesday after a run of data — from GDP to house prices — surprised on the downside.

Market pricing for another hike this year has come back to around 68%, from more than fully priced a month ago.